The Economist Once Again Worried About Our Innovation-Hindering Patent System

from the ping-pong dept

My wife once complained about how she couldn't read business magazines any more because they would seemingly totally contradict themselves every few months. The Economist seems to be demonstrating that pretty clearly. Last year, we noted that it published an article about how patents were hindering innovation. But then, a few months ago, it wrote about how we needed more patents approved faster. And now... as a whole bunch of you have been sending me, it's got a rather nice piece about how patents stand in the way of future prosperity. The Economist piece basically ties together a bunch of stories about problems of the patent system. If you read Techdirt, you're familiar with all the stories in the Economist piece, because they all (every one of 'em) were covered here last week. In fact, I would guess that the nameless author (ah, The Economist and your hatred for bylines) is a Techdirt reader, since it even includes a mention of the Mark Lemley paper we wrote about last week, even though that paper actually came out a few months ago. Either way, it's nice to see The Economist, yet again, pointing out the problems of the patent system, just months after it was leaning in the other direction. I'd prefer a generally consistent stance (or at least an acknowledgment of the whipsawing positions), but still it's nice to see more mainstream coverage of the disaster that our patent system represents for innovation today.

The author....

...is Will Wilkinson. And I do think it's the absence of bylines that creates the impression of "inconsistency." Anywhere else, you'd just see that one writer expressed one view in the magazine, and another writer for their blog expressed a different view, which would seem quite normal.

Re: The author....

...is Will Wilkinson. And I do think it's the absence of bylines that creates the impression of "inconsistency." Anywhere else, you'd just see that one writer expressed one view in the magazine, and another writer for their blog expressed a different view, which would seem quite normal

Yes, indeed! If there were bylines, it wouldn't just feel like "here's the Economist's official position..."

Re:

This is what journalism is supposed to do, show [at least] two sides of an issue and let the reader decide on their own merits.

But that's not what it's doing. If it showed the two together, and said "here's one viewpoint, here's the other," I'd be fine with it. Instead, one month it appears to "take a stand" on what needs to be done... but a month later says the exact opposite, without even referring to the other story

Re: I sort of like the economist's no-bylines thing.

The articles don't even really contradict each other. One calls for a better funded more efficient patent office, the other calls attention to junk patents.

Personally I think the first article oversold the benefits of having patents at all, but it's not like that's all that controversial. It even calls for patent reform to be passed. And, since outlawing patents is not on the table, a better run and better funded patent office is necessary if crap patents are ever to be weeded out at an early stage.

Perfectly Simple Fix

The negative economic effects of the patent system are a consequence of the granting of monopoly privileges by the government. It is well known in economics that monopolies are harmful to economic efficiency. Free and fair commercial competition is the thing which produces goods and services with the best quality and at the lowest cost. However, being the owner of a monopoly is highly profitable, so there are always people ready to make the false argument that granting them a monopoly would somehow benefit society.

So, from a politician's point of view, the matter is confusing. On the one hand, the economics profession says, "Monopolies are bad." Yet on the other hand there are lots of people saying, "No, no, my monopoly is good and here is a donation." It has taken economists hundreds of years to work out that monopolies are bad. Alas, the politicians are not there yet.

For the patent system, the answer is simple. Take out the monopoly privilege. Just get rid of it. Repeal the part of the law which says patent infringement is illegal. We wish to encourage patent use. We wish to stamp out the extortion racket.

The patent bar will shout, "Nobody will patent anything any more!" Yes they will, inventors love being given the credit for making an invention. The existence of open source software has shown that there are plenty of people who will do hard intellectual work just for getting the credit, or to help their neighbor.

The patent bar will shout, "Nobody will invent any more!" Yes they will, necessity is the mother of invention. Granting a damaging monopoly privilege, in addition to necessity, is neither necessary nor desirable. People continually make inventions accidentally, as a consequence of solving problems.

The patent bar will shout, "Look at the injustice being done to inventors!" There is no such injustice. Decent, kindly inventors are pleased that others can use their inventions. Greedy inventors should be told, "Your services are no longer required." The greedy inventors are too expensive for what they produce. They should be competed out of existence.

It always plays the same. They look at only one side (the time something is under patent) without looking at how much faster we got the discovery because of investments and efforts made to make new discoveries / new technologies as a result of patents.

If you get something 10 years sooner, you are only giving up about 5 years, but you have it 10 years sooner.

They should consider what would happen if suddenly all investment in "new" stopped, and we turned into a society of innovation by paint color. That would really move us forward, wouldn't it?

Re:

As someone who works in one of the fields affected by patents, I can tell patents do not help at all. Nobody does research in this field to get patents, everybody instead does research to create new products. So, removing patents in this field would not decrease innovation.

Re: Re:

I am sorry, but your comment makes no sense.

The patent isn't the goal, the patent is just a security that allows for the investment. If you felt you are going to have to deal with people immediately stealing your idea and reproducing it without having to incur research and development costs, would you in fact make that investment? The answer for some would be no.

Removing patents would increase "innovation", but that innovation would be "innovation by paint color" mostly, as people cycle around the same products and attempt to make them marginally better. The ones who make the big leaps might not bother to try. Why work on a technology for a much better color screen, when you know everyone else will just rip it apart and replicate what took you years to develop?

In the end, the patent system encourages investment, which in turn means we get the new, innovative technologies (and the products that come from them) years sooner than we would otherwise.

Re: Re: Re:

You sir are a member of the patent bar, the exact group which is the only one doing well out of patents. Recall: "there are always people ready to make the false argument that granting them a monopoly would somehow benefit society." Your economics sucks.

Dealing with your false arguments one by one:

"I am sorry, but your comment makes no sense." His comment makes perfect sense. There are none so blind as those who will not see.

"The patent isn't the goal, the patent is just a security that allows for the investment." Incorrect. Investment money is destroyed by the patent system, not encouraged. Venture capitalists are well aware of this phenomenon and that is why they are opposed to the patent system.

"If you felt you are going to have to deal with people immediately stealing your idea and reproducing it without having to incur research and development costs, would you in fact make that investment?" Wrong again. Copiers do have to incur costs and delays. Trade secrets are alive and well and living in production engineering. Did you know that microcontrollers have a security fuse, which, when blown, prevents the code from being read? There are plenty of other techniques which make things difficult for copiers. Meanwhile, the original developer is out there selling, getting a reputation and enjoying first-mover advantage.

"The answer for some would be no." Some investments do not get made. So what? Happens all the time, situation normal.

"Removing patents would increase "innovation", but that innovation would be "innovation by paint color" mostly, as people cycle around the same products and attempt to make them marginally better." Still wrong. People who come out with a "me too" product tend to do poorly in the marketplace. But, if they fix a major defect in the original product, that is different. That is also commercial competition -- the thing we are supposed to be encouraging, remember?

"The ones who make the big leaps might not bother to try." This is one of your worst lies. There are very few "big leaps". We humans do things incrementally. Examine any "big leap" carefully and you will see it was actually a set of tiny leaps, building on each other. Patent monopolies directly hurt that exact process, thereby slowing down big leaps.

"Why work on a technology for a much better color screen, when you know everyone else will just rip it apart and replicate what took you years to develop?" This is once again the fallacy that copying is easy. Have a look at the Chinese mobile phone market. The only people who are copying easily are the people running "ghost shifts" in factories that make the genuine article. Everybody else is staying away from "me too" products and trying to make something better, which is not just a copy. Commercial competition, remember?

"In the end, the patent system encourages investment" No, it doesn't. You are repeating yourself. Go away and find out why venture capitalists do not like patents.

"which in turn means we get the new, innovative technologies (and the products that come from them) years sooner than we would otherwise." Wrong on two counts:

(1) Investment by itself is not enough. Engineers also have to have the freedom to do what they want. The patent system strikes directly at that freedom by imposing huge costs on anybody who accidentally invents something which has already been patented. The chilling effects are severe.

(2) As the patent system is now, with monopolies in it, it does what all monopolies do, produces lower quality products at higher prices. Monopolies are bad. Get the message.

So, wait a second...

If patents represent nothing more than a hinderance to innovation, why do people keep applying for them? I've never been a fan of playing by rules that other people make that I think are stupid.

What's wrong with just...innovating? Quit using the broken system. If someone steals your idea, so what? Execute it better than they do and let the market vote with their dollars.

Right now the only people who are winning in the patents space are the patent defense aggregators and the lawyers. It's a whole cottage industry created by people (RAY NIRO, I'M LOOKING AT YOU) who found an unintended side-effect of the current patent laws and exploited it. Ah, the American Dream.

Re: So, wait a second...

>>What's wrong with just...innovating? Quit using the broken system. If someone steals your idea, so what? Execute it better than they do and let the market vote with their dollars.

I totally get where you are coming from on this. The problem in today's IP-encumbered atmosphere, however is that someone else won't just "steal your idea", they'll steal it, patent it themselves, then sue you for violating "their" patent.